It’s difficult to pinpoint when exactly the term ‘digital transformation’ was coined, but it has been in wide usage for more than a dozen years.
By Chris Kruger, MD of Nashua Kopano
The idea that it describes is even older, going back at least as far as the rise of the World Wide Web in the 1990s. As such, it’s understandable that many C-suite executives are questioning what it means to be fully digitally transformed and what comes next.
To answer those questions, it’s helpful to differentiate digital transformation from ‘digitisation’ which describes the transformation of analogue formats like paper into digital data, and ‘digitalisation’ which is about using digitised data and digital technology to automate workflows or create new employee and customer experiences.
Differentiating digital transformation, digitisation, and digitalisation
Digitisation, as such, refers primarily to data and digitalisation to processes. This work is still in progress for most organisations. The average business still has many processes that are at least partially paper-driven and heavily manually for reasons that range from regulation or legacy system constraints to internal resistance to change.
Digital transformation, meanwhile, is all about an organisation’s ability to integrate digital data and new digital technologies into its strategy and operations. It’s not a project, a programme or even a strategy with an endpoint – rather, it’s about how effectively an enterprise and its workforce can use digital technologies to enhance the customer experience, drive revenue growth and improve profitability.
This isn’t as simple as buying and using the latest technology – it is about rewiring the organisation’s culture, talent, and operating model for new ways of working, collaborating and making decisions. Its success is measured by how agile the organisation is in driving value from data at scale, embedding new tech into its operations, and responding to fast-changing market conditions and customer demands.
Journey, not destination: Digital transformation as ongoing evolution
Digitisation and digitalisation are part of the digital transformation journey, but not the endpoint. That’s because digital transformation is a philosophy that an entire organisation embraces rather than a project that gets completed in a division or a change to a particular process or business system. Digital evolution is perhaps a better description than digital transformation.
So why is digital transformation important? The simple answer is that we’re only just at the start of the digital revolution. We’ve already seen how digital native companies from Amazon to Netflix have disrupted their markets. These companies were born digital with an innate ability to use technology to redefine their categories with new customer experiences and business models.
While ecommerce, mobile connectivity, big data analytics and the cloud have changed the world in dramatic ways, we’re not even scratching the surface of technologies such as artificial intelligence, the internet of things, the metaverse, and augmented and virtual reality. Digital transformation is essential to keep pace with how these technologies will change the world in the not-to-distant future.
Responding to the unpredictable
In the words of MIT Sloan Management Review: “Digital transformation is better thought of as continual adaptation to a constantly changing environment.”
The benefits aren’t simply about doing the same things better and faster, but also constantly evolving a business in response to unpredictable market conditions, ever-changing customer expectations, and unprecedented rates of technology change.